China narrows gap to US in renewable-energy ranking

China closed in on the U.S. at the top of a renewable-energy ranking by consultants EY after installing record solar-power capacity last year.

China scored 73.1 out of 100 on theRenewable Energy Country Attractiveness Index in the fourth quarter, up from 71.6 in the third, while the U.S. slipped to 74.4 from 74.7, EY said today in an e-mailed report. The two were followed in the list of 40 countries by Germany, Japan and the U.K.

“China has remained a dominant market in the index, reflecting an unprecedented pace of deployment backed by substantial targets and continued high growth in energy demand,” said Klair White, editor of the report. “In the U.S., the shale-gas boom and underlying partisan politics continued to put strain on the renewables sector.”

China, the largest energy user, is speeding the development of renewables to curb air pollution. The nation has some of the toughest efficiency standards for buildings and transport, and its support for photovoltaic projects has caused solar-panel costs to tumble. In the U.S., shale investment has reduced the incentive to add clean power as higher gas output cuts prices.

China installed a record 12 gigawatts of photovoltaic panels last year, more than the total amount of solar power in operation in the U.S. It’s targeting a further 14 gigawatts this year. The country also installed about 14 gigawatts of wind power in 2013 and is targeting 18 gigawatts this year, according to Bloomberg New Energy Finance.

U.S. Wind

In contrast, U.S. wind installations plummeted to 1,084 megawatts last year from 13,131 megawatts in 2012 after a tax credit lapsed, according to American Wind Energy Association data. Even so, the subsequent renewal of the credit means wind projects under construction now top 12,000 megawatts, it said.

The same two countries have led the index by EY, formally known as Ernst & Young, since the third quarter of 2006 when the U.S. took the lead from Spain. Germany was ranked first with the U.S. for one quarter in 2008. The U.S. led for all of last year.

Japan leapfrogged the U.K. to take fourth place behind Germany in the latest list. That’s because Japan’s solar and offshore-wind industries are expanding, while policy changes in Britain raised the perceived investment risk there, EY said.

“The U.K.’s fading appeal is the direct result of the lack of clarity on the government’s long-term energy strategy at a time when energy security is a concern and investors are looking for commitment,” Ben Warren, an environmental finance partner at EY, said in an e-mailed statement.

The top 10 was rounded out by Canada, India, Australia, France and South Korea.

The index is a composite of several rankings that EY produces, assessing the investment climate for wind power, solar generation and other renewable technologies. It also scores nations on the ease of doing business there, the stability of their economies and the degree to which lawmakers prioritize renewables over other generation sources.